|
|
Enron Mail |
POWER POINTS: Enron Exit From Energy Markets Gets Messy
Dow Jones Energy Service, 11/30/01 Enron Impact On Gas Sector Not Yet Clear - AGA Officials Dow Jones Energy Service, 11/30/01 Enron Considering Options; Bankruptcy Decision Said Unlikely Before Next We= ek Dow Jones Business News, 11/30/01 U.K. Trading Panel Decides Against Expelling Enron Dow Jones International News, 11/30/01 Tables Turned As Commercial Banks Lick Enron Wounds Dow Jones Capital Markets Report, 11/30/01 Enron Collapse Could Weigh Heavy On Some Insurers Dow Jones News Service, 11/30/01 US Physical Gas Prices End Down Ahead Of Weekend Dow Jones Energy Service, 11/30/01 USA: Enron directors' side deals raise eyebrows. Reuters English News Service, 11/30/01 USA: Basic accounting tripped Enron, experts say. Reuters English News Service, 11/30/01 CANADA: UPDATE 1-Enron collapse likely kills planned Ontario plant. Reuters English News Service, 11/30/01 S&P: Credit Derivative Exposure to Enron is $6.3 Billion PR Newswire, 11/30/01 Scope of Peer Review of Andersen Audit Practice to Be Expanded PR Newswire, 11/30/01 Fitch on Enron: The Coming Creditor Battle Over Enron's Assets Business Wire, 11/30/01 S&P Places Sutton Bridge Power's 'BBB' Ratings on CreditWatch Negative PR Newswire, 11/30/01 Westport Terminates Enron Contracts PR Newswire, 11/30/01 POWER POINTS: Enron Exit From Energy Markets Gets Messy By Mark Golden 11/30/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) A Dow Jones Newswires Column=20 NEW YORK -(Dow Jones)- Despite assurances from many companies that the remo= val of Enron Corp. (ENE) from North American energy markets was proceeding = in an orderly fashion, Enron havoc broke loose Friday morning. Cleaning up the mess will be nearly unbearable for energy industry employee= s for a few weeks because Enron was involved in so many trades. But industr= y workers don't expect electric reliability to be threatened or gas supplie= s to be disrupted. What's more, the free market's ability to resolve proble= ms most efficiently and to keep infrastructure humming will shine.=20 The lull after Wednesday morning's collapse of Dynegy Inc.'s (DYN) acquisit= ion of Enron was deceptive. On Thursday afternoon, Mirant (MIR) told Enron = it would make no more power and gas deliveries to the company starting Satu= rday, the first day of the new month. A couple of other companies followed = suit by Friday morning.=20 Enron in turn began to lose its ability to meet its obligations as a suppli= er, because it doesn't produce much electricity. To meet sales obligations,= it buys from producers and other traders. The positive feedback system is = expected to spiral upwards until early next week, when Enron could be almos= t totally out of the energy market.=20 To get an idea of how messy this all is, look at one troubled transaction T= hursday for Saturday delivery of electricity to a utility. The utility boug= ht power from Sempra Energy (SRE), which had bought it from El Paso (EPG), = which bought from Dynegy (DYN), which bought from PG&E (PCG), which bought = from Aquila (ILA), which bought from El Paso subsidiary Engage, which bough= t from Enron, which bought from Mirant, which bought from British Columbia'= s BC Hydro, which bought from TransAlta (T.TA), which will generate the pow= er Saturday from its Centralia power plant in Washington state. TransAlta p= robably sold the power over a year ago.=20 Mirant Balks=20 In physical contracts for energy, a daisy chain that long isn't unusual. An= d, unlike oil and natural gas markets, power markets still primarily trade = contracts for physical delivery, rather than financial hedges.=20 Trouble arose on the particular transaction because Mirant decided on Thurs= day that it would no longer perform under its obligations to Enron. Mirant = figured, reasonably, that its chances of getting paid for any current deliv= eries aren't great. Fortunately, Silicon Valley Power, which is the municip= al utility of the City of Santa Clara, Calif., stepped in between Mirant an= d Enron, so that power will flow.=20 Under industry rules, the end-use utility must know all of the intermediary= owners as a matter of reliability, so that if any kinks arise in the chain= utility operators know whom to call. Also, if some force majeure like a tr= ansmission line outage, prevents all of the electricity under contract from= being delivered, the utility has to notify all the previous owners to pay = whomever they bought from for only what was ultimately delivered.=20 Why, one might ask, didn't participants just take Enron out of the chain? M= irant could have just sold to Engage, the company Enron had sold to.=20 Unfortunately, removing Enron from the industry wont' be that easy. Forward= prices for natural gas everywhere in North America and for bulk power in t= he western U.S. plummeted through most of this year. The market value of th= at Centralia power plant's December output was about $250 a megawatt-hour t= his spring. It's worth about $29/MWh in today's market. For just one standa= rd 25-MW monthly contract, that's a loss in value of about $2 million.=20 Most likely, Mirant sold to Enron at a higher price than Enron sold to Enga= ge. Maybe Mirant sold to Enron at $175/MWh and Enron sold to Engage at $125= /MWh. Mirant would be quite happy to sell, instead, to Engage today for $12= 5/MWh rather than have to bring its power into today's $29 market. But Enga= ge, assuming Enron couldn't deliver, wouldn't hear of it.=20 Holes To Plug Will Multiply=20 For days, energy companies have disclosed their exposures to Enron. Despite= billions of dollars of transactions on the books between most major tradin= g companies with Enron, exposures are anywhere from nothing to $100 million= . The numbers are relatively low because the companies are netting the bene= fits of Enron's exit - in this case Engage - against the losses - think Mir= ant. Engage and Mirant will switch positions many times over the next sever= al weeks.=20 Meet in the marketplace they will, along with all the other Enron counterpa= rties. Enron plugs like Silicon Valley are already being exceeded by a grow= ing number of holes. So multiply Thursday's one electricity deal by thousan= ds of similar situations on gas and power supplies in North America every d= ay, to say nothing of Enron's other commodity contracts around the world.= =20 Brokers, with their temporary burst of business, will be the only ones smil= ing. But by the first of the year, the worst of the Enron energy market cha= os will be a distant memory.=20 Well, maybe by the spring.=20 -By Mark Golden, Dow Jones Newswires; 201-938-4604;=20 mark.golden@dowjones.com <mailto:mark.golden@dowjones.com< Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Enron Impact On Gas Sector Not Yet Clear - AGA Officials 11/30/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) WASHINGTON -(Dow Jones)- It is too early to tell what impact the financial = meltdown of Enron Corp. (ENE) will have for the natural gas sector, America= n Gas Association officials said Friday.=20 "We can't tell you today" how Enron's problems will shake out in the gas se= ctor and the economy, said David Parker, AGA's president and chief executiv= e. The "winners and losers" will depend on each individual company's exposure = to Enron, Parker said.=20 "We're going to have a lot of sorting out time," said Michael Warren, Energ= en Corp. (EGN) president and chief executive and AGA's incoming chairman.= =20 The AGA officials spoke with reporters Friday, one day after Energen announ= ced that its exposure to Enron would hurt the company's net an estimated 20= -25 cents per share.=20 Enron recently warned its gas utility customers that its ongoing ability to= deliver is questionable, given the company's plight, Warren said. Neverthe= less, he noted that many suppliers are stepping into the breach created by = Enron's demise.=20 Having Enron fail at the cusp of the winter heating season is "momentous," = but the markets "have not really missed a beat," Warren said.=20 Enron's rapid trading retreat "has not made this market collapse," he said,= marveling over "the resilience" of competitive markets.=20 Provoking laughter, Warren noted that a year ago, as natural gas prices wer= e spiking, "Enron was asking us if we were creditworthy."=20 Parker and Warren said Enron's problems have worsened the reluctance of sta= te regulators to open retail markets to competition in the wake of Californ= ia's power market problems last year.=20 Twenty-three states have opened retail natural gas markets to competition, = involving 80% of gas sold at retail, AGA said.=20 A year from now, the number will still be 23, Warren said. The one-two punc= h of Enron and California have "reduce or retarded" the willingness of stat= es to open up markets to competition, he said.=20 -By Bryan Lee, Dow Jones Newswires; 202-862-6647;=20 bryan.lee@dowjones.com <mailto:bryan.lee@dowjones.com< Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Enron Considering Options; Bankruptcy Decision Said Unlikely Before Next We= ek 11/30/2001 Dow Jones Business News (Copyright © 2001, Dow Jones & Company, Inc.) Embattled energy-trading concern Enron Corp. is still considering all of it= s options, including the likelihood of filing for bankruptcy protection und= er Chapter 11, people close to the matter said. Such a decision, however, w= on't occur before next week, these people said.=20 Some Enron employees are being told not to expect any action over the weeke= nd, these people said. The Chapter 11 process is designed to hold a company's creditors at bay whi= le it hammers out a plan to reduce debt. Although people familiar with the = situation insist an all-out liquidation -- known as a Chapter 7 filing -- i= sn't in the cards, some industry observers continue to speculate that the b= eleaguered company may be forced to go that route.=20 With its energy-trading business crippled by the downgrade Wednesday of mos= t of its debt to junk status and a buyout by Dynegy Inc. (DYN) called off l= ater that day, Enron's fortunes have been in a downward spiral.=20 As of 4 p.m. EST Friday on the New York Stock Exchange, shares of Enron (EN= E) dropped 10 cents, or 28%, to 26 cents. The stock had traded above $90 a = share last year, and, all told, equity shareholders have lost over $60 bill= ion.=20 Enron's outstanding bonds trade at prices of around 15 cents on the dollar.= The selloff in Enron's bonds -- down from the upper 50-cent range before W= ednesday's developments -- suggests bondholders don't expect much if any re= covery on their investments.=20 There is little doubt that any bankruptcy proceedings will be complex and t= ime-consuming, given the nearly $62 billion in assets on Enron's balance sh= eet, as of its last quarterly financial report. Also, the bankruptcy court = would have to wade through and untangle many items not listed on its balanc= e sheet. Those financing vehicles are what sparked the company's troubles l= ast month.=20 Enron's liabilities are still a matter of debate. The company has an estima= ted $13 billion in debt on its balance sheet, and a further $7 billion in f= inancings off the balance sheet. However, there may be other obligations lu= rking in connection with its investment partnerships.=20 Since the debt downgrade, Enron's trading business appears damaged beyond r= epair. Without a viable credit rating, the company no longer has access to = the reams of cash it needs to run that business.=20 Underscoring Enron's woes, the company told some of its trading partners on= Friday that it will default on some of its deliveries of wholesale electri= city under contract for Sunday and Monday, people familiar with the situati= on said.=20 Some observers had expected Enron to file for bankruptcy protection as earl= y as this week. But the people close to the situation said the complex busi= ness structure is slowing the process. Where the company would file is also= a question: The Houston-based company could file where it is headquartered= , but it is incorporated in Oregon, and many companies look to the favorabl= e courts of Delaware whenever possible.=20 Enron hired restructuring and bankruptcy specialist Blackstone Group late l= ast week to advise it on corporate matters and to help restructure its debt= .=20 The company also is being advised by law firm Weil Gotshal & Manges, a bank= ruptcy specialist.=20 Key Supplier Stops Delivery=20 Mirant Corp. (MIR) stopped delivering all power and natural gas to Enron so= ld under existing contracts world-wide, traders and people familiar with th= e situation said.=20 The move brings Enron's struggles in North America to a new level. Until no= w, most companies had stopped making new trades with Enron, but continued t= o deliver under their previously done deals. And Enron has been delivering = under its contracts in North America.=20 Through Thursday, Enron was able to get third parties to step in and buy fr= om Mirant and sell to Enron. In one transaction, for power to be delivered = Saturday, Silicon Valley Power stepped into the middle. Silicon Valley Powe= r, the municipal utility of Santa Clara, Calif., confirmed Thursday that it= had done so.=20 "That transaction for Saturday is based on a contractual obligation we made= to Enron in the past, when Enron was on a positive trading position with u= s," said Silicon Valley's marketing manager, Larry Owens.=20 Energy-market sources expect other companies to follow suit with Mirant, an= d they don't expect Enron will be able to find intervening third parties fo= r much longer. Companies have the legal right to suspend deliveries if they= reasonably expect they won't get paid.=20 To date, Enron has paid its bills on time. Saturday gas and power deliverie= s carry more risk than deals for delivery even Friday, as Enron won't have = to pay for deliveries starting Dec. 1 until late January.=20 A spokesmen for Enron wouldn't comment. "We don't discuss activities with i= ndividual counterparties," spokesman Eric Thode said.=20 Layoffs Begin in Europe=20 Enron officials said Friday the company will lay off all but a handful of i= ts European employees.=20 A few staff will be retained to wind up the remaining operations of Enron i= n Europe, which are now largely under the court-appointed administration of= PriceWaterhouseCoopers.=20 A statement issued by PriceWaterhouseCoopers said "approximately 1,100 redu= ndancies have been made in the U.K. across the group, with 250 staff retain= ed."=20 There was no word on the fate of Enron's employees elsewhere in Europe.=20 "The over-riding priority is to preserve the valuable parts of the business= and to reduce the cash needs of the business whilst seeking to secure the = future of certain Enron businesses and its employees," PriceWaterhouseCoope= rs senior administrator Tony Lomas said in the statement.=20 Separately, as of Friday, two of Enron's divisions -- Enron Capital and Tra= de Resources Ltd. and Enron Gas and Petrochemical Trading Ltd. -- were in d= efault regarding their obligations under the United Kingdom's Balancing and= Settlement Code, although U.K. balancing market operator Elexon stressed t= hat regulators decided not to expel Enron from trading at this time.=20 "The panel will meet again on Dec. 5 to further discuss Enron, and have the= right to review their decision not to expel Enron at any time before that,= " said a spokeswoman for Elexon.=20 In addition, German grid operators cancelled their grid-access contracts wi= th Enron Capital & Trade Resources, effectively excluding it from all trans= actions that involve delivery to, or transit through Germany, Europe's larg= est power market and an essential part of Enron's European power activities= .=20 Enron also has been suspended from trading on Nord Pool, the UKPX, the Amst= erdam Power Exchange, the European Energy Exchange and the Automated Power = Exchange's U.K. contracts.=20 -- Christina Cheddar, Janet Whitman, Geoffrey T. Smith, Sarah Spikes, Carol= S. Remond, Mark Golden and Kristen McNamara of Dow Jones Newswires contrib= uted to this report.=20 Copyright © 2001 Dow Jones & Company, Inc.=20 All Rights Reserved Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 U.K. Trading Panel Decides Against Expelling Enron 11/30/2001 Dow Jones International News (Copyright © 2001, Dow Jones & Company, Inc.) LONDON-(Dow Jones)- Despite concluding that Enron Capital and Trade Resourc= es Ltd. and Enron Gas and Petrochemical Trading Ltd. are in default of the = Balancing and Settlement Code, its panel decided Friday not to expel Enron.= =20 "The panel will meet again on December 5th to further discuss Enron, and ha= ve the right to review their decision not to expel Enron at any time before= that," said a spokeswoman for Elexon, the balancing and settlement code ma= nager. The panel also notified counterparties and the company's administrator of t= he default, and published the default finding on the Elexon website.=20 -Sarah Spikes, Dow Jones Newswires; (+44 20) 7842 9345;=20 sarah.spikes@dowjones.com <mailto:sarah.spikes@dowjones.com< Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Tables Turned As Commercial Banks Lick Enron Wounds By Michael Mackenzie Of DOW JONES NEWSWIRES 11/30/2001 Dow Jones Capital Markets Report (Copyright © 2001, Dow Jones & Company, Inc.) NEW YORK -(Dow Jones)- After enduring one of the toughest operating environ= ments in recent years, investment bankers can at least raise a smile that c= ommercial banks are bearing the brunt of the fallout from the anticipated c= ollapse of energy trading house Enron Corp. (ENE).=20 The likelihood that Enron will file for what would be a messy bankruptcy is= "sure to illustrate one of the fundamental differences between commercial = banks and investment banks," noted analysts Van Hesser and Justin Ziegler a= t Credit Suisse First Boston in New York. The appetite of commercial banks for more exposure to an individual name th= an their investment banking rivals is evident in a breakdown of the direct = loan exposures to Enron, a list that's dominated by commercial banks.=20 According to ratings agency Fitch, J.P. Morgan Chase has $500 million in un= secured exposure and at least a further $400 million that is secured. Citig= roup (C), is gauged at having $800 million in exposure with $500 secured an= d $300 million unsecured by Fitch. And another leading commercial entity, B= ank of America Corp (BAC), is believed to have $300 million in direct loan = exposure as at Sept. 30, note CSFB.=20 Extending loans to companies that can run into problems, "is definitely the= risk in commercial banking, but such banks are well diversified and able t= o absorb these situations," said Ken Worthington, director and equity analy= st at CIBC World markets in New York.=20 However, in the case of J.P. Morgan Chase "which prides itself on passing c= redit risk off to others through various means, including loan syndications= and hedging, this is a stunning figure," said Kathy Shanley, bank and fina= nce analyst at Gimme Credit, an independent credit research firm in New Yor= k.=20 In recent years, commercial banks have sought to leverage their diversified= structures by aggressively muscling into the territory of investment banks= . They sought to underwrite corporate bond and stock issues - the tradition= al turf of investment banks - by offering commercial banking sweetners such= as lines of credit and loans.=20 Investment banks do not enjoy the benefit of a substantial balance sheet an= d tend to focus on underwriting and generally don't provide loans. And whil= e investment banks have been forced by competitive pressures to extend lend= ing facilities - demonstrated by Morgan Stanley's credit facilities to Luce= nt Technologies - "they usually offload their balance sheet exposures in or= der to lower their risk profile," said Worthington.=20 This in turn underlines the more selective approach that investment banks h= ave to financial markets than their commercial banking cousins. While inves= tment banks are not gun-shy of building risk exposures, the CSFB analysts b= elieve "they tend to build fewer and they tend to be more disciplined about= it."=20 This helps explain why in respect to Enron, CSFB believes "broker exposures= are relatively light." The bank expects exposure to Enron at Goldman Sachs= Group (GS), and Morgan Stanley (MWD) "to be in the $50 to $100 million ran= ge, while other major securities houses such as Bear Stearns Companies Inc = (BSC), Lehman Brothers (LEH) and Merrill Lynch & Co. (MER) "should have exp= osures that are relatively immaterial."=20 But the carnage at Enron has left some investment bankers looking better of= f than the gungho commercial banks who sought juicy M&A fees by providing c= reditlines to the company as it planned its ultimately doomed merger with D= ynegy Inc. (DYN). As Citi and JPM face the prospect of a battle over the as= sets of Enron in a bankruptcy filing, "Goldman Sachs sits on the sidelines = with a cheshire cat grin, reminding investors it declined to extend a credi= t line to Enron as a condition of signing on as a merger advisor," noted Gi= mme Credit's Shanley.=20 The travails surrounding Enron and the big commercial banks, "reads like a = case study dreamed up by the Securities Industry Association to illustrate = why banks should never have been allowed in the investment banking business= in the first place," she said.=20 Although Goldman and Morgan Stanley have "meaningful energy trading operati= ons," CSFB believe that both banks are well versed in hedging and structuri= ng collaterized trading agreements. Such methods limit the potential for ga= ping losses associated with failure of a counterparty to trades previously = transacted.=20 Worthington at CIBC added, "what really drives the business of investment b= anking are relationships and talent."=20 But mired at the bottom of the investment banking cycle, many firms have be= en looking to combine their talented workforce with the attractive balance = sheets of commercial banks in order to enhance their operation. They've loo= ked to the success of Citigroup's vaunted one-stop shopping model, which co= mbines banking services with the investment banking offerings of Salomon Sm= ith Barney.=20 Although Fitch notes "the banking industry's stated exposures do not appear= , in and of themselves, significant enough to have ratings implications," t= he news from Enron is perhaps a timely reminder that cultivating a big bala= nce sheet also carries certain risks.=20 That's not to say investment banking won't undergo further consolidation th= at involves finding large balance sheets. The search for profits and econom= ies of scale from building a joint commercial and investment banking franch= ise are the stuff of many bankers' dreams.=20 Indeed, many analysts believe Merrill Lynch & Co. (MER) is preparing the wa= y for a marriage with a commercial bank as it slashes running costs and sel= ls and restructures its operations in Canada, Australia and Japan.=20 Yet the trend to wholesale consolidation between the two cultures of bankin= g "will take a number of years to play out and it will be driven by the rel= ative profitability a merger between commercial and investment banking will= likely deliver," said CIBC's Worthington. -By Michael Mackenzie, Dow Jones= Newswires, 201-938-5451; michael.mackenzie@dowjones.com <mailto:michael.mackenzie@dowjones.com< Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Enron Collapse Could Weigh Heavy On Some Insurers By Chad Bray Of DOW JONES NEWSWIRES 11/30/2001 Dow Jones News Service (Copyright © 2001, Dow Jones & Company, Inc.) NEW YORK -(Dow Jones)- The insurance industry didn't need Enron Corp.'s (EN= E) problems, particularly when it comes to reinsurance prices.=20 Primary insurers could be on the hook for as much as $2 billion in claims a= gainst directors and officers policies, surety bonds and financial guarante= es related to the Houston energy trading firm, which, among its options, is= considering seeking Chapter 11 bankruptcy protection. Some insurers also w= ill likely take a hit in their investment portfolios if Enron defaults on i= ts bond payments. The loss would be material, but not devastating for the industry. However, = amid the backdrop of the World Trade Center disaster, Enron's impact could = pressure some firms going forward, particularly if most of their Enron risk= was ceded to reinsurers. "This event is likely to exacerbate the (reinsura= nce) capacity shortfall in the market that already exists, making 2002 one = of the more, if not the most, powerful pricing years in recent history," sa= id Alice Schroeder, a Morgan Stanley insurance analyst.=20 Reinsurance prices were rising prior to the Sept. 11 terrorist attacks. Rat= es are expected to rise dramatically in light of the events as reinsurers g= et a handle on how to insure this new risk in the U.S.=20 Aviation rates, for example, have already climbed 200% to 300% in some case= s. Reinsurers also are willing to take on less risk, forcing primary insure= rs to keep more of the coverage or write policies offering less coverage.= =20 Chubb Corp. (CB), a Warren, N.J., insurer, said it was reviewing its surety= bonds related to Enron and could have a maximum net pretax exposure under = outstanding surety bonds of about $220 million. The firm said its after-tax= exposure is $143 million, or 82 cents a share.=20 A company takes out a surety bond in the event it can't fulfill a contractu= al obligation. Typically, surety bonds would pay out any monetary guarantee= s if a company was unable do so. Surety bonds are often used to improve a f= irm's credit rating.=20 The insurer was unable to estimate the actual amount, if any, that they may= be required to pay or the timing of those payments because of contingencie= s, including the actions of others, possible judicial rulings or the amount= s that Chubb may recover under surety bond documents. No claims have yet be= en filed under the surety bonds.=20 Jay Cohen, a Merrill Lynch analyst, said Chubb's surety bond obligations in= regards to Enron generally guaranteed the delivery of natural gas to energ= y producers, such as utilities. Each bond could have different defined even= ts that would trigger a claim, such as a bankruptcy, Cohen said.=20 "The Enron loss will likely be a very sizable one in the surety line, a lin= e that was not particularly effected by the Trade Center attack," Cohen sai= d. "The loss will likely exceed $1 billion and we note that the industry wr= ote surety premiums totaling $3.5 billion in 2000. We would expect this los= s to have an effect on insurers' risk appetite pertaining to surety obligat= ions."=20 Cohen said Chubb likely has reinsurance for its losses and that its gross e= xposure is "above the $220 million maximum net exposure."=20 Ron Frank, a Salomon Smith Barney analyst, said, while the Enron situation = is clearly "unusual," the loss should be viewed relative to Chubb's overall= financial condition, which is quite solid. He said Chubb's historical prof= itability in surety is "very good even including Enron."=20 Frank noted the Chubb announcement didn't address any other exposure to Enr= on, such as directors and officers liability. "Management did comment to us= that if they saw another exposure material to earnings per share, it would= have been released," Frank said. "We infer from this that reinsurance and = reserves will meaningfully mitigate such exposures."=20 Large surety writers include St. Paul Cos. (SPC), American International Gr= oup (AIG), CNA Financial (CNA), Act Ltd. (ACE), Safeco Corp. (SAFC) and the= Travelers unit of Citigroup Inc. (C). However, not all large writers of su= rety obligations necessarily have an exposure to Enron.=20 At the same time, a major Enron loss could inhibit some traditional propert= y-casualty insurers from writing financial guarantee-related risk in the fu= ture, said Schroeder, the Morgan Stanley analyst.=20 Schroeder noted that could be a positive for traditional financial guaranto= rs in terms of less competition, but could also be a concern.=20 For example, Ambac Financial Group Inc. (ABK) and MBIA Inc. (MBI), both tra= ditional financial guarantors, have been able to "wrap" lower levels of ris= k on certain collateralized debt obligation deals with traditional P&C insu= rers, while taking the higher, or less risk prone, layers for themselves. B= eing conservative in nature, they might not be willing to take on the more = risky layers in the future. -By Chad Bray, Dow Jones Newswires, 201-938-529= 3=20 chad.bray@dowjones.com <mailto:chad.bray@dowjones.com< Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 US Physical Gas Prices End Down Ahead Of Weekend 11/30/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) HOUSTON (Dow Jones))--U.S. natural gas physical prices violently swerved ba= ck and forth Friday in a 65 cents-to-85-cents range, as some traders scramb= led to find gas for first-of-the-month delivery, traders said.=20 "It was an unusual secondary market for various reasons," a trader said. Some marketers were dumping gas early on a low-demand weekend, but utilitie= s with questionable suppliers came out bidding, and prices went north, he s= aid.=20 Much of the problems came after several trading companies said they had sus= pended trading with Enron Corp., which teetered on the brink of bankruptcy.= =20 First-of-month dynamics - including balancing, storage and moderate weather= - played as much of a role in the bidding, however, traders said.=20 Behind-the-scenes, as credit managers discussed how to limit exposure to En= ron, gas set for December and weekend delivery had to be rescheduled, trade= rs said.=20 "You had marketers (Thursday) pushing the spreads to the Nymex so prices we= re out of whack on Friday," said one Gulf Coast trader.=20 One trader said the confusion seen in the market is the result of "cutting = people who are cutting Enron, the end result is the same. Someone might hav= e just cut Enron's credit, so that gas has to go somewhere."=20 "There's five to 10 reasons why the market did what it did," he said. "Enro= n's been a factor in our market for the last three weeks - it's on everyone= 's mind."=20 "It's just chaos more than anything," said Allen Rather, a funds analyst in= Houston.=20 At the benchmark Henry Hub in south Louisiana at midday, traders paid $1.45= -$2.25 per million British thermal units, down 2 cents-65 cents.=20 Deals at Transcontinental Gas Pipe Line Station No. 65 were done in a $1.27= -$2.15/MMBtu range, down 25 cents-85 cents.=20 At the Katy hub in East Texas, buyers paid $1.75-$2.20/MMBtu, down 15 cents= to 56 cents. At the Houston Ship Channel, prices were in a $1.80-$2.30/MMB= tu range, down 8 cents-53 cents.=20 In California at the Ehrlenberg border station, prices fell 15 cents-55 cen= ts to a $1.90-$2.60/MMBtu range.=20 At Waha in West Texas, buyers paid $1.65-$2.05/MMBtu, down 33 cents-65 cent= s.=20 -By John Edmiston, Dow Jones Newswires,713-547-9209;=20 john.edmiston@dowjones.com <mailto:john.edmiston@dowjones.com< Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 USA: Enron directors' side deals raise eyebrows. 11/30/2001 Reuters English News Service (C) Reuters Limited 2001. HOUSTON, Nov 30 (Reuters) - Directors of Enron Corp., already under fire fo= r failing to identify and correct problems that brought the energy trading = giant to the brink of collapse, had lucrative side deals with the company t= hat drew added criticism from corporate governance experts on Friday.=20 The deals ranged from consulting jobs to purchases of goods and services fr= om affiliated companies. They raised doubts about the board's independence = from the senior managers they were supposed to supervise on behalf of the s= tockholders, the experts said. "Directors who have side consulting arrangements are not considered, under = governance guidelines, to have the necessary independence from management,"= said Charles Elson, director of the Center for Corporate Governance at the= University of Delaware.=20 In contrast to the murky off-balance-sheet financing deals that played a ke= y role in Enron's demise, the company made detailed disclosures of its deal= s with members of its board of directors in a proxy statement published ear= lier this year.=20 The document shows that in addition to his supervisory duties as an Enron d= irector, John Urquhart was paid $493,914 last year for providing consulting= services to Enron.=20 "That's a huge amount of money. Best practice is no consulting fees to any = directors," said Nell Minnow, an editor at business research group The Corp= orate Library, which does extensive work on corporate governance issues.=20 Another Enron director, Lord John Wakeham, received $72,000 last year for a= dvice on Enron's European operations.=20 Enron director Herbert Winokur was affiliated with the privately owned Nati= onal Tank Co. that made sales to Enron worth $370,294 last year, the proxy = statement said.=20 The document also shows that Enron paid $517,200 last year for travel servi= ces provided to Enron employees. The travel agency business that provided t= he services is 50 percent-owned by Sharon Lay, sister of Enron chairman and= chief executive Ken Lay.=20 "Most major companies do not engage in that dodge because it is such an obv= ious one," Minnow said. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 USA: Basic accounting tripped Enron, experts say. By Deepa Babington 11/30/2001 Reuters English News Service (C) Reuters Limited 2001. NEW YORK, Nov 29 (Reuters) - As experts look through the remains of Enron C= orp. for someone to blame, eyes are turning toward the auditors who allowed= it to break accounting rules, rather than on the rules themselves.=20 Once the biggest trader in the newly deregulated power market, Enron is now= near collapse. The auditing profession, which gives financial statements t= he stamp of approval, needs to be more vigilant to prevent similar future d= isasters, the experts said. "The auditors - the Big Five auditing firms - have got to look at themselve= s and say, how can this sort of thing happen?" said David Hawkins, an accou= nting consultant with Merrill Lynch and a professor at Harvard University.= =20 "The rules are there. Have we lost our way, so to speak? Do we need a new c= ompass direction?"=20 Enron, once a Wall Street darling with a share price that hit more than $90= , started coming apart after it reported losses from transactions that were= led by its former chief financial officer and kept off its balance sheet.= =20 Experts said it failed to apply generally accepted accounting principles an= d failed to disclose sufficient information to explain its dealings.=20 Andersen, the accountancy firm that audited Enron's books, said such judgme= nts are premature.=20 "The best idea is to gather information, as the Securities and Exchange Com= mission and Enron board are doing, and then decide what lessons we can lear= n," Andersen spokesman David Tabolt said. "Instant judgments often are base= d on presumptions ... that often turn out later to be incorrect."=20 ACCOUNTING 101=20 But the rules that Enron appears to have violated are quite straightforward= , according to some experts.=20 For example, recording the note Enron received in return for selling equity= to its limited partnerships as an asset is contrary to an accounting rule = that bans such treatment unless the note is to be paid off in a few days, H= awkins said.=20 Ultimately, those transactions turned sour, causing a $1.2 billion reductio= n in shareholder equity and losses that contributed to a $1 billion third-q= uarter charge.=20 "This is Accounting 101 here," said Paul Brown, chairman of the accounting = department at New York University's Stern School of Business. "It may be th= at the way it was dressed up was so complicated that it was hard for the au= ditors to ferret it out but, then again, that's their job."=20 The Financial Accounting Standards Board (FASB), which sets accounting rule= s, said firms must disclose extensive information about related-party trans= actions. Enron may well have violated the spirit of that law by inadequatel= y explaining its transactions, the experts said.=20 When Enron began to unravel, analysts criticized Andersen for failing to ex= plain the firm's dealings in its financial statements. Enron reported its t= ransactions in cryptic footnotes that many said were almost incomprehensibl= e.=20 Andersen has also come under fire for failing to consolidate those partners= hips into Enron's books, which would have given a truer picture of Enron's = debt.=20 Enron later restated its results to reflect those transactions in its books= , cutting earnings by almost $600 million since 1997, effectively admitting= it made a mistake, but not before its credibility had been shattered.=20 On Thursday, Harvey Pitt, chairman of the SEC, which is investigating Enron= and Andersen, said that the agency is looking at whether accounting princi= ples were applied "appropriately," and what may need changing.=20 PATCHING UP LOOPHOLES=20 To be sure, critics have long called for better accounting rules, particula= rly those regarding the type of off-the-balance-sheet financing that Enron = engaged in.=20 Tim Lucas, who heads a FASB task force on emerging issues, said FASB was tr= ying to complete big projects on business combinations and asset retirement= obligations this year, before tackling the issue.=20 Lucas said the Enron saga may also hold some implications for rules on fina= ncial instruments such as derivatives and recording them at fair value.=20 "We will certainly be aware of this (Enron situation) and if it sheds some = light on an area where we can improve the rules we will try and do that," h= e said. "But it's not obvious to me yet that it does."=20 But apart from raising questions about Andersen's role, the implications of= Enron's near collapse may well force the entire auditing community to do s= ome serious soul searching to prevent future disasters. "This is a wake up = call," New York University's Brown said. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 CANADA: UPDATE 1-Enron collapse likely kills planned Ontario plant. 11/30/2001 Reuters English News Service (C) Reuters Limited 2001. (Recasts with comments from area legislator in paragraph 3, adds Ontario Po= wer Generation's Enron exposure paragraph 13)=20 TORONTO, Nov 30 (Reuters) - The collapse of U.S. energy trader Enron Corp. = likely spells the end of plans by its Canadian subsidiary to build a C$200 = million ($130 million) generating plant in southwestern Ontario. But government officials said on Friday that shelving the plant would have = little effect on the province's plans to open the electricity market to com= petition next year.=20 "Enron had an option to purchase a parcel of land in St. Clair Township to = build a peaker plant to generate electricity during peak periods," said Car= oline DiCocco, the member of the provincial legislator for Sarnia-Lampton.= =20 "The feeling in the community is that this is not going to happen because o= f severe financial difficulties," she said.=20 Enron, North America's largest energy trader, now on the verge of collapse,= planned through Enron Canada Corp. to build a 400 megawatt generating plan= t near Sarnia, Ontario. It recently renewed an option on the land in St. Cl= air Township and was seeking various regulatory approvals.=20 However, Enron's Canadian president Rob Milnthorp told Reuters earlier this= year, that the firm had delayed construction of the plant until a clear da= te was set for the province to open up the market to competition.=20 The company was not available for comment on Friday.=20 "We were aware that Enron had considered a plant and those plans have been = on hold for some time now," said Mike Krizanc, a spokesman for Ontario's En= ergy Ministry.=20 "The latest events affecting the company have no impact on what's happening= in Ontario in terms of competition and supply that we're anticipating," he= said.=20 Ontario, Canada's most populous province and the nation's industrial and ec= onomic heartland, is set to unveil plans within the next two months for the= deregulated power market. The province has already pushed back its origina= l November 2000 deadline by 18 months.=20 Earlier this year, it said it would open the market by May 2002.=20 Although the planned Enron plant will likely never be built, market experts= said the company could sell what infrastructure and development it had com= pleted.=20 "That is potentially an attractive asset. But any time you're selling a hal= f-built house, you know it's just not the best way to get value," said Tom = Adams, executive director at industry watchdog Energy Probe in Toronto.=20 Meanwhile, Ontario Power Generation, the province's biggest electricity pro= ducer, said in a release that its exposure to Enron was less than C$100,000= and therefore it "does not anticipate any adverse earnings impact" related= to its trading activities with the U.S. firm.=20 ($1=3D$1.57 Canadian). Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 S&P: Credit Derivative Exposure to Enron is $6.3 Billion 11/30/2001 PR Newswire (Copyright © 2001, PR Newswire) NEW YORK, Nov. 30 /PRNewswire/ -- Standard & Poor's has reviewed a number o= f credit derivative transactions in which Enron appears and found exposure = to the company in three different types of these transactions. Divided amon= g these deals, direct Enron credit exposure potentially could total $3.3 bi= llion.=20 "Although much attention has been focused on Enron in relation to loan expo= sures, the energy sector, and the commodities markets, it is also a named s= ource of credit risk in many credit derivatives transactions," said Nik Kha= kee, director of Standard & Poor's Structured Finance Derivatives group. "In addition, Enron had an overall derivatives market strategy that include= d credit derivatives. Thus Enron is not only a source of credit risk in der= ivatives transactions, it is a source of risk to derivatives transactions a= s it could possibly cause termination events in swaps that Enron has contra= cted," Mr. Khakee continued.=20 On a global basis, Enron appears in 50 transactions as a reference entity o= r reference obligation in pooled credit derivative transactions, meaning th= at Enron is a credit exposure. Two counterparties transact a swap in which = the default of Enron, as defined by specified credit event language defined= in the swap documentation, would lead to potential loss to one counterpart= y, the floating-rate payer.=20 This loss is defined by a valuation process whereby a settlement value for = the potential Enron exposure is determined. This value can often be the res= ult of a bidding process in the market where dealers are solicited. This bi= dding process is commonly referred to as cash settlement. Alternatively, ph= ysical settlement may be selected as the settlement mechanism whereby an En= ron fixed income instrument is exchanged for the notional value of the Enro= n exposure in the overall pool.=20 These transactions total $79 billion in total notional amount. The potentia= l Enron exposure in the deals in aggregate totals $3.3 billion or 0.75% of = total notional exposure. It is important to note that these transactions ar= e primarily investment grade credit derivative collateralized debt obligati= ons in which credit support to rated noteholders typically averages 2%-4%. = Therefore, a default of Enron and low recovery on Enron post- default would= significantly erode this credit support.=20 "Standard & Poor's is currently reviewing all transactions in which Enron i= s a named reference entity for possible rating actions," Mr. Khakee said.= =20 Enron may also appear in this same type of credit derivative transaction bu= t as part of a small pool, rather than a large pool of overall credit expos= ure. In this case, Enron may potentially be the single reference source of = credit risk in a credit derivative transaction, irrespective of the credit = risk posed by the actual counterparty risk in these transactions (which is = not addressed in the estimated exposures identified above).=20 Enron appears as a reference credit in six transactions with potential tota= l notional exposure to Enron of $2.7 billion in these single-name risk or s= mall basket credit derivative transactions.=20 In addition, in December 2000, Enron began acting as the counterparty in sw= ap transactions without also being the reference entity. As such, its count= erparties are vulnerable to potential default by Enron as counterparty, eve= n if it is not a reference source of credit exposure in a transaction.=20 In these transactions, any default by Enron as counterparty under the swap = contract would initiate a process whereby termination of the swap contract = is possible. The nondefaulting counterparty would have the option to replac= e Enron with a new counterparty in the swaps. This could be done on the who= le swap notional amount of credit exposure or the portfolio could be carved= up into pieces in order to distribute the risk across various counterparti= es.=20 Whether transferred to one counterparty or many, this process, called assig= nment, leads to a mark-to-market valuation. That mark is either in favor of= Enron or the counterparty Enron faces. Thus, after an Enron default, the c= ounterparty could be exposed to a liquidity risk because it would have to m= ake a mark-to-market payment to Enron. Conversely, if Enron has to make a m= ark-to market payment to the counterparty, the counterparty may not be rece= iving the payment, especially if insolvency proceedings commence.=20 Enron has secured ratings on three such credit derivative transactions in w= hich a total notional amount of $3 billion of credit derivative exposure wa= s traded.=20 To give some perspective on this number, Mr. Khakee explained that Standard= & Poor's credit derivatives analysts in New York who review pools of credi= t exposure have reviewed transactions with a total notional amount of $23 b= illion in the year to date. "The notional amount of $3 billion relative to = Enron represents a larger percentage of overall rated credit derivative tra= nsactions than would be expected of an entity that is not a traditional bro= ker-dealer, investment bank, or insurer," he said. /CONTACT: Nik Khakee, +1-212-438-2473, or Mary Ryan, +1-212-438-2090, of St= andard & Poor's/ 16:54 EST=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Scope of Peer Review of Andersen Audit Practice to Be Expanded 11/30/2001 PR Newswire (Copyright © 2001, PR Newswire) CHICAGO, Nov. 30 /PRNewswire/ -- Andersen today announced Deloitte & Touche= will expand the scope of its peer review of Andersen's US accounting and a= udit practice. The expanded procedures, which have been under consideration= for over two weeks, will include, among other things, review procedures in= Andersen's Houston office. Andersen asked for additional work in light of = financial reporting issues at Enron Corp. Deloitte & Touche had independent= ly determined it wanted to conduct additional procedures.=20 "Maintaining the trust and confidence of investors is a central tenet of ou= r firm," said Joseph F. Berardino, managing partner and chief executive off= icer. "We invest hundreds of millions of dollars each year to improve our a= uditing tools and skills so that investors can rely on the Andersen signatu= re as a sign of quality financial reporting. We are confident that our syst= em of quality is strong. We are pleased with Deloitte & Touche's decision t= o undertake additional review procedures." The Public Oversight Board (POB) is charged with oversight of the accountin= g profession's self-regulatory peer review process in the United States. Ev= ery three years since 1978, major accounting firms, under the oversight of = the POB, have been engaged to conduct comprehensive reviews of the accounti= ng and audit practices of member firms in the American Institute of Certifi= ed Public Accountant's (AICPA) SEC Practice Section (SECPS).=20 Peer reviews involve an assessment of a firm's system of quality control fo= r its accounting and auditing practice under standards established by the S= ECPS. This includes, among many other quality measures, an evaluation of a = firm's audit methodology and tools as well as a review of certain audits in= select offices. Deloitte & Touche's work on the 2001 Andersen review was n= earing completion when Enron announced certain financial reporting issues.= =20 The 2001 peer review has been planned and under way for more than eight mon= ths. To date, Deloitte & Touche reviewers and Andersen practice review team= s have reviewed the system of quality, including audit work, in 30 offices = involving more than 40 percent of Andersen's U.S. audit partners. The revie= ws conducted by Andersen review teams were tested by Deloitte & Touche, as = is customary, and were subject to the oversight of the POB.=20 "In light of recent developments, we believe that extending the peer review= to include work done in other offices, including Houston, and other proced= ures that Deloitte & Touche deems appropriate and necessary is the right th= ing to do," said Berardino. He noted that Andersen was the first major firm= to engage another firm to review its system of quality globally -- in 1977= .=20 Andersen is a global leader in professional services. It provides integrate= d solutions that draw on diverse and deep competencies in assurance, tax, c= onsulting, corporate finance, and in some countries, legal services. Anders= en employs 85,000 people in 84 countries. Andersen is frequently rated amon= g the best places to work by leading publications around the world. It is a= lso consistently ranked first in client satisfaction in independent surveys= . Andersen has enjoyed uninterrupted growth since its founding in 1913. Its= 2001 revenues totaled US$9.3 billion. Andersen refers to the brand identit= y adopted by member firms of the Andersen global client service network. Le= arn more at www.andersen.com <http://www.andersen.com<; .=20 MAKE YOUR OPINION COUNT - Click Here=20 <http://tbutton.prnewswire.com/prn/11690X97166278<; /CONTACT: Dave Tabolt of Andersen, +1-312-931-9000, or david.w.tabolt@us.an= dersen.com <mailto:david.w.tabolt@us.andersen.com< / 17:07 EST=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Fitch on Enron: The Coming Creditor Battle Over Enron's Assets 11/30/2001 Business Wire (Copyright © 2001, Business Wire) NEW YORK--(BUSINESS WIRE)--Nov. 30, 2001--With total assets of $62.8 billio= n at Sept. 30, 2001, Enron would become the biggest bankruptcy in United St= ates history if it files for bankruptcy as expected. Fitch anticipates a le= ngthy and contentious battle over Enron's assets. Some of the key issues fo= r creditors are:=20 What is the Enterprise Value? There are several issues that cloud an enterprise valuation of Enron. First= and foremost is the uncertain value remaining in Enron's wholesale trading= business. Approximately 75% of Enron's total 2000 Income before interest, = minority interests and taxes was generated by the wholesale services segmen= t, which consists primarily of the energy trading business. Based on recent= refusals of Enron's energy trading partners to accept the company as a cou= nter-party and exacerbated by implementation of trading restrictions on the= company by the New York Mercantile Exchange, Fitch believes significant do= ubt has been cast upon Enron's ability to continue to operate this business= at its previous scale. Further, previous valuations of bankrupt trading bu= sinesses have been quite low. Therefore, Fitch believes it would be prudent= to assign a very conservative valuation to this segment in a recovery anal= ysis. Secondly, due to the ongoing Securities and Exchange Commission inves= tigation of Enron's accounting, and previous restatements of earnings, ther= e exists uncertainty over the accuracy of historical earnings reports. Fina= lly, Enron's retail energy segment is closely integrated with the company's= wholesale operations for energy supply. If the wholesale operations remain= shutdown, the future cash flow generation ability of the retail segment ma= y be materially impaired.=20 How will the value of Enron's assets be allocated in a bankruptcy?=20 Fitch has conducted a preliminary analysis of recovery prospects for variou= s creditor classes. Enron's pipeline business has historically been a stead= y source of cash flow generation. A market comparable method of valuation f= or the transportation segment results in strong recovery prospects for secu= red creditors at Northern Natural and Transwestern. Fitch estimates there w= ould be roughly $1 billion of residual value from the pipelines following t= he satisfaction of their secured and unsecured claims and Dynegy's claim. A= s part of the merger agreement with Enron, Dynegy injected $1.5 billion int= o Enron in exchange for preferred stock in Enron's largest pipeline, Northe= rn Natural Gas, which can be converted into ownership of the pipeline. Dyne= gy has exercised this option. It is noted that as part of its investment in= the preferred stock, Dynegy negotiated the right to block a bankruptcy fil= ing at this subsidiary.=20 Enron has various other assets that could be monetized to satisfy unsecured= creditor claims. Enron has an agreement to sell its Portland General Elect= ric subsidiary for anticipated net proceeds of about $1.8 billion in cash o= r cash equivalents in 2002. In addition, Enron has contracted to sell $800 = million of merchant assets which is expected to close before year end, subj= ect to execution risks including regulatory and transfer risks. The net pro= ceeds that could be realized from cash on hand, inventories, and various ot= her monetizable assets are difficult to estimate. Moreover, the full extent= to which the company's assets have been pledged is uncertain.=20 The outstanding amount of senior unsecured debt is currently estimated to b= e about $11 billion, excluding possible liabilities arising from trust stru= ctures such as Marlin and Osprey. Additionally, other general unsecured cla= ims in a bankruptcy would include customer deposits, minority interests, pr= oject and structured finance make whole obligations, as well as an unknown = amount of amount of exposure to is shareholders, employees and others relat= ing to the spate of recent litigation against Enron. The amount of these ot= her general unsecured claims can not be determined at this time.=20 Despite the fluidity of the situation, Fitch's preliminary view is that uns= ecured creditors would realize recoveries in the 20-40% range. This opinion= considers the deterioration in the value of the wholesale trading business= , the pledge of flagship assets to secured creditors, the uncertain cashflo= w generation prospects of the retail segment in light of the wholesale busi= ness situation, the opaque and uncertain accounting and off balance sheet l= iability issues, and other unexpected liabilities.=20 Will Enron be able to continue to operate as a going concern or seek to liq= uidate assets?=20 Enron would require a sizable debtor in possession facility to fund ongoing= operations and induce counter-parties to resume business with Enron. Fitch= believes it is uncertain whether Enron has adequate unencumbered or over- = collateralized assets to obtain a DIP large enough to enable the resumption= of wholesale operations.=20 What is the situation for secured creditors to Marlin Water Trust II and Os= prey Trust?=20 The ratings of Marlin's $915 million senior secured notes and Osprey's $2.4= billion senior secured notes rely on support of Enron. A liquidation of th= e underlying assets is the primary source of repayment. A shortfall in liqu= idation proceeds would become a claim against Enron, which may be subject t= o subordination to the claims of other creditors in a bankruptcy. CONTACT: Fitch, New York Sharon Bonelli, 212/908-0581 or Robert Grossman, 2= 12/908-0535 or Ralph Pellecchia, 212/908-0586 or Glen Grablesky, 212/908-05= 77 or James Jockle (media relations), 212/908-0547=20 15:56 EST NOVEMBER 30, 2001=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 S&P Places Sutton Bridge Power's 'BBB' Ratings on CreditWatch Negative 11/30/2001 PR Newswire (Copyright © 2001, PR Newswire) NEW YORK, Nov. 30 /PRNewswire/ -- Standard & Poor's today placed its triple= -'B' rating on Sutton Bridge Power's (SBP) guaranteed GBP195 million (US$31= 0 million) and US$150 million secured bonds, issued by Sutton Bridge Power = Financing Ltd., on CreditWatch with negative implications. The CreditWatch = placement reflects the potential for deterioration in the credit quality of= debt-service payments if the existing 25-year swap with Enron Corp. is not= fundamentally restructured.=20 The rating action results from the downgrade of Enron Corp.'s corporate cre= dit rating to single-'B'-minus by Standard & Poor's. Enron, through Enron C= apital & Trade Resources Corp., is a counterparty in the 25-year (until 202= 2) U.K. pound/U.S. dollar swap with Sutton Bridge Financing. A possible res= tructuring or cancellation of the swap may expose bondholders to currency e= xchange risk. Standard & Poor's will be shortly meeting with London Electricity PLC's (LE= ) management (which owns the Sutton Bridge Power plant) to discuss, among o= ther things, LE's options for hedging the currency exposure at SBP that wil= l preserve SBP's credit strength. /CONTACT: Jean-Francois Veron of Standard & Poor's, +33-1-4420-7316/ 15:37 = EST=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Westport Terminates Enron Contracts 11/30/2001 PR Newswire (Copyright © 2001, PR Newswire) DENVER, Nov. 30 /PRNewswire/ -- Westport Resources Corporation (NYSE: WRC) = announced today it has terminated its commodity sales and hedging contracts= with Enron North America Corp. and certain of its affiliates. Westport exe= rcised its rights pursuant to the early termination provisions of such cont= racts. Based on current estimates and after applying all estimated set- off= s, Westport believes that it owes Enron North America Corp. and its affilia= tes approximately $800,000 under these contracts. In addition, Westport has= commodity sales contracts with EOTT Energy Partners, L.P. and ENA Upstream= Company LLC, affiliates of Enron Corp. Westport believes that its exposure= under these contracts is less than $4.0 million. (Photo: http://www.newsco= m.com/cgi-bin/prnh/20010424/WRCLOGO )=20 Contact information: Lon McCain or Jonathan Bloomfield at (303) 573-5404.= =20 Forward-Looking Statements=20 This material includes "forward-looking statements" within the meaning of S= ection 27A of the Securities Act of 1933, as amended, and Section 21E of th= e Securities Exchange Act of 1934, as amended. Forward-looking statements i= nclude estimates, plans, expectations, opinions, forecasts, projections, gu= idance or other statements that are not statements of fact, including but n= ot limited to the amount of any potential exposure to Enron. Although the C= ompany believes that the expectations reflected in such forward-looking sta= tements are reasonable, it can give no assurance that such expectations wil= l prove to have been correct. There are many factors that could cause forwa= rd-looking statements not to be correct, including differences in contractu= al interpretation, future volatility in oil and gas prices, and other uncer= tainties related to calculating market values of the Company's contracts wi= th Enron, as well as the risks and uncertainties inherent in the Company's = business set forth in the filings of the Company with the Securities and Ex= change Commission. The Company does not undertake any obligation to update = any forward-looking statements contained in this material. MAKE YOUR OPINION COUNT - Click Here=20 http://tbutton.prnewswire.com/prn/11690X33430822 /CONTACT: Lon McCain or Jonathan Bloomfield of Westport Resources Corporati= on, +1-303-573-5404/ 14:46 EST=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09
|